Another big shift in the store/web balance

Scanning bar codes with mobile phones could accelerate the shift of shopping online.

A few days ago I was on a plane, and the guy in the seat next to me was playing with his iPhone. I asked him about it, and he happily flipped through several of his favorite apps. To show me how one of them worked, he picked up a can of soda, scanned the bar code with the iPhone’s camera and told me that, if we were on the ground and had Internet access, the app would tell him all the nearby places that sell this product and what they charge for it.

I thought about that conversation yesterday when eBay announced that it’s buying RedLaser, the company that makes a popular bar code-scanning app for the iPhone (maybe the one my travel companion was using.) The first thing eBay did was make it free, whereas RedLaser had charged for it. And eBay is going to make sure the app gives consumers access to all listings on eBay and on the comparison shopping site it owns, Shopping.com. Reportedly, eBay soon aims to provide access through the app to products listed on other online marketplaces, notably eBay’s chief rival, Amazon.com. No doubt similar apps soon will be available (and may already be) for other types of smartphones.

This is big, in my opinion. Last holiday season you occasionally spotted a consumer in a store checking a price through a smartphone. This fall I expect it will be a common occurrence. If I’m right, it has big implications both for bricks-and-mortar stores and web merchants.

For stores, it’s the ultimate nightmare—the customer with perfect information. Why buy that sweater for $80 at Nordstrom when Macy’s has the exact same item for $69.99? Inevitably, this will make it harder for stores to sell merchandise at full price, at least as long as any other retailer is discounting it. (This raises the possibility that manufacturers, perhaps under pressure from high-end retailers, may enforce minimum advertised price rules more aggressively, trying to avoid discounting—but that’s a whole other topic.)

For online retailers, this is potentially great news—but it means doing some work to take advantage of it. Think of what the consumers will do: She’s standing in the aisle looking at that sweater, scans the bar code and what does she see? In all likelihood it will be the prices for that product at online marketplaces like eBay and Amazon, and on comparison shopping sites. The app also likely will show what nearby bricks-and-mortar stores are charging for it.

That means e-retailers have to do two things. First, make sure they show up on that consumer’s screen. That means optimizing product feeds to the major online marketplaces and comparison shopping sites. Second, they must make it very easy for the consumer to order from you through her mobile phone.

The second point represents the harder task. After all, if you’re selling that sweater at $1 less than the store she’s in, she might as well just buy it there. But if you’re $5 or $10 cheaper, maybe she buys it from your site—if it’s easy. If it means entering a lot of data into her phone, such as card number and billing and shipping address, forget it. I’d have to save $50 before I’d do that on a mobile phone.

But if I’m already registered with your site, or with a payment service you work with (PayPal and Google Checkout come to mind, as well as Visa’s new Rightcliq service), and it’s just one or two clicks to make that purchase—I might just click to buy, even just to save $5. And I think many other consumers will, too.

Bottom line: if online retailers can make it easy for mobile consumers to buy from them, this bar code scanning could mean yet another big shift of shopping from stores to the web.